Crypto Infrastructure Investment Soars as Investors Shift Focus from DeFi to Market Plumbing

ST. MORITZ, SWITZERLAND – February 2025 – A significant capital reallocation is reshaping the cryptocurrency landscape as institutional investors increasingly prioritize core infrastructure over decentralized finance applications. According to a comprehensive survey released today, 85% of senior decision-makers now identify infrastructure as their top funding priority, marking a fundamental shift in investment strategy that reflects growing concerns about market liquidity and settlement capacity.

Crypto Infrastructure Investment Takes Priority Over DeFi

The digital asset conference CfC St. Moritz recently published survey results revealing a dramatic change in capital allocation preferences among institutional crypto investors. Based on responses from 242 invitation-only attendees in January 2025, the findings demonstrate a clear movement away from speculative applications toward foundational market systems. Consequently, infrastructure now commands the majority of institutional attention, while DeFi has moved to secondary consideration.

Survey participants included institutional investors, C-suite executives, regulators, and family office representatives from global financial centers. Their collective perspective provides crucial insights into the evolving priorities of major capital allocators. The data indicates that while innovation expectations remain positive, execution-focused development now dominates strategic planning.

Liquidity Constraints Drive Strategic Reassessment

Respondents consistently identified liquidity shortages as the industry’s most pressing risk factor for 2026. Market depth and settlement capacity emerged as primary bottlenecks preventing larger institutional capital pools from entering cryptocurrency markets. Approximately 84% of participants described the macroeconomic environment as favorable for crypto growth, yet they simultaneously highlighted infrastructure limitations as significant barriers to capitalization.

This apparent contradiction reveals a maturation in institutional thinking. Investors recognize crypto’s potential while acknowledging practical implementation challenges. The survey results suggest capital deployment is becoming more selective and risk-aware, with infrastructure receiving priority funding to address these fundamental constraints.

Market Depth and Settlement Capacity as Critical Bottlenecks

Institutional adoption of cryptocurrency faces specific technical hurdles that infrastructure investment aims to address. Market depth – the market’s ability to absorb large orders without significant price impact – remains insufficient for major institutional portfolios. Similarly, settlement capacity limitations create operational friction for large-scale transactions.

The survey identified several infrastructure categories receiving increased attention:

• Custody Solutions: Secure storage mechanisms for institutional-scale holdings
• Clearing Systems: Efficient post-trade processing and risk management
• Stablecoin Infrastructure: Settlement layers for fiat-pegged transactions
• Tokenization Frameworks: Systems for representing real-world assets on blockchain

These focus areas represent a shift from consumer-facing applications to institutional-grade plumbing. The transition reflects lessons learned from previous market cycles, where infrastructure limitations sometimes constrained growth despite strong demand.

Innovation Expectations Shift Toward Practical Implementation

While most survey respondents expect innovation to accelerate in 2026, fewer anticipate dramatic breakthroughs compared to previous years. This moderation suggests a maturation in market expectations, with emphasis shifting from speculative potential to practical implementation. The change aligns with broader industry trends toward regulatory compliance and institutional integration.

The following table illustrates how investment priorities have evolved between 2024 and 2025:

US Regulatory Environment Shows Notable Improvement

Survey participants reported significantly improved perceptions of the United States regulatory landscape for digital assets. Respondents ranked the US as the second-most favorable jurisdiction globally, trailing only the United Arab Emirates. This represents a substantial positive shift from previous years, when regulatory uncertainty frequently topped investor concern lists.

CfC St. Moritz analysts attribute this improvement to several factors. Stablecoin legislation has provided clearer frameworks for dollar-pegged digital assets. Additionally, regulatory guidance for banks and traditional financial institutions has increased confidence among institutional participants. The evolving regulatory clarity appears to be reducing one major barrier to institutional crypto adoption.

Crypto IPO Expectations Moderate After Record Year

Initial public offering expectations have cooled following what respondents described as a record year for crypto listings in 2025. While most participants still anticipate continued IPO activity, confidence levels have moderated. Valuation resets and liquidity constraints emerged as primary concerns tempering enthusiasm.

This cautious optimism reflects broader market conditions rather than diminished interest in crypto companies. Investors appear to be applying more traditional valuation metrics and demanding clearer paths to profitability. The shift suggests increasing integration between crypto and conventional financial markets.

Global Jurisdictional Comparisons and Competitive Dynamics

The survey revealed interesting geographical variations in regulatory approaches and market development. The United Arab Emirates maintained its position as the most favorably perceived jurisdiction, building on consistent regulatory development and proactive engagement with industry participants. Several European jurisdictions also received positive ratings, particularly Switzerland and the United Kingdom.

Asian markets presented a mixed picture, with Singapore receiving strong marks for regulatory clarity while other jurisdictions faced more cautious assessments. This geographical analysis helps explain capital flow patterns and corporate relocation decisions within the cryptocurrency sector.

Infrastructure Investment as Foundation for Future Growth

The current focus on crypto infrastructure investment represents a strategic foundation for future market expansion. By addressing liquidity constraints and settlement limitations, institutional investors are building the necessary systems for broader adoption. This approach mirrors historical patterns in traditional financial markets, where infrastructure development preceded major capital inflows.

Industry experts compare this phase to the development of electronic trading systems in traditional finance during the 1990s. Those infrastructure investments enabled subsequent market growth by improving efficiency, transparency, and accessibility. Similar dynamics appear to be unfolding in cryptocurrency markets, with infrastructure serving as the necessary precursor to institutional-scale participation.

Conclusion

The survey findings clearly demonstrate that crypto infrastructure investment has become the dominant priority for institutional capital allocators. This strategic shift from DeFi applications to market plumbing reflects maturing investor perspectives and practical considerations about market functionality. Liquidity constraints and settlement capacity limitations now drive investment decisions more than speculative potential.

As cryptocurrency markets continue evolving, infrastructure development will likely determine the pace and scale of institutional adoption. The improved regulatory environment in key jurisdictions provides additional support for this infrastructure-focused approach. Consequently, market participants should expect continued emphasis on custody, clearing, stablecoin systems, and tokenization frameworks throughout 2025 and into 2026.

FAQs

Q1: Why are crypto investors prioritizing infrastructure over DeFi?
Investors are shifting focus because infrastructure limitations – particularly liquidity constraints and settlement capacity – represent the most significant barriers to institutional adoption. Building robust market systems is now seen as a prerequisite for sustainable growth.

Q2: What specific infrastructure areas are receiving the most investment?
Custody solutions, clearing systems, stablecoin infrastructure, and tokenization frameworks are attracting substantial capital. These areas address fundamental operational requirements for institutional participation in cryptocurrency markets.

Q3: How has the US regulatory environment changed according to the survey?
Survey participants ranked the US as the second-most favorable jurisdiction globally, representing significant improvement. Stablecoin legislation and clearer rules for traditional financial institutions have increased regulatory certainty and investor confidence.

Q4: What are the main liquidity constraints mentioned in the survey?
Market depth – the ability to execute large orders without major price impact – and settlement capacity limitations were identified as primary liquidity constraints. These factors prevent larger institutional portfolios from entering cryptocurrency markets.

Q5: How have expectations for crypto innovation changed?
While most respondents still expect innovation to accelerate, fewer anticipate dramatic breakthroughs compared to previous years. The shift reflects more realistic expectations and greater emphasis on practical implementation rather than speculative potential.